Create meaningful customer relationships by showing your values
In the quest for customer loyalty, companies want to know what they can do to establish and maintain their customer relationships over the long haul. So what drives customer loyalty? According to a study my colleagues and I recently published there is more to creating customer loyalty than just awarding points. Our research found that true, enduring loyalty comes from six key relationship drivers:
- Trust
- Appreciation
- Investment
- Reliability
- Empathy
- Shared Values
From a customer’s perspective, shared values means that they feel a connection to the companies they do business with. It starts with a customer seeing the value in the products or services a company sells but it goes beyond that. It also includes a company’s respect for the consumer and the community we share. In many ways, consumers believe the brands they choose are a reflection of who they are.
Assuming many share your company’s same values, showing your customers what you stand for can actually boost your bottom line by creating a stronger emotional bond with your customers.
But this is where things get interesting. That emotional bond with your customers is not going to come from values like motherhood and apple pie. While those are lovely, they are so ubiquitous and vanilla that they don’t really differentiate you in the eyes of consumers. The kinds of values that create more enduring customer loyalty are the ones that help customers more fully understand your company’s personality and outlook on the community. When customers realize that they see the world the same way your company does, stronger emotional bonds form, which leads to better customer loyalty.
CVS sticks to its core value of improving health
In September 2014 CVS became the first national retail pharmacy chain to stop selling tobacco products in all of its stores. The reason? Selling tobacco conflicted with its core value of helping people on their path to better health.
This was a bold move, and a risk, since at that time tobacco sales accounted for between $1.5 billion and $2 billion of CVS’s annual sales. In the following quarter, general merchandise sales dropped, but pharmacy sales increased 4 percent. A year later, merchandise sales rebounded and continue to increase. CVS’s courage paid off. Not only did it help more people quit their smoking habit (A study they funded proved their move actually drove cigarette sales down throughout states where CVS had a 15 percent or more share of the retail pharmacy market.), but also helped customer loyalty and satisfaction.
Dick’s Sporting Goods restricts gun sales
A more recent example comes from Dick’s Sporting Goods. Following the 2018 school shooting tragedy in Parkland, Florida, Dick’s Sporting Goods announced that it would no longer sell assault style rifles, high capacity magazines, or firearms to anyone under 21 years of age.
Wading into the waters of the highly contentious, heavily reported-on gun control issue took real courage from Dick’s. And the move wasn’t easy. The retailer received boycotts and social media threats shortly after their announcement. But those on the other side of the issue came out in support of the retailer. According to a Sprout Social analysis, tweets sent in the aftermath of the announcement jumped 12,000 percent, and 79 percent showed a positive sentiment.
The financial markets responded favorably to the announcement as well, with Dick’s stock trading up for that day. Even more encouraging was the observed lift in store traffic shortly after the announcement. Two separate companies that track retail store traffic, reported a lift of between 3 percent and “a high single digit” for Dick’s stores in the week immediately following the announcement. And in May 2018, the retailer reported Q1 earnings that exceeded Wall Street’s expectations, raising shares 24 percent the day of the announcement.
There is no question that showing your true self to the public can have its risks—especially on highly charged issues like gun control—but when your views align and resonate with a large number of your customers, your bravery and authenticity can really pay off in true, enduring customer loyalty.